NEW YORK (AFX) - AB Volvo, the world's second-largest truck maker after DaimlerChrysler AG, has outlined ambitious plans for a series of acquisitions to broaden its product range, according to a published report Sunday.
'Given our growth target of 10 percent, to do that wholly organically is almost impossible. A significant part of that will come from acquisitions,' Leif Johansson, chief executive, the Financial Times said, citing an interview in an article on its Web site.
His comments come as a group of unknown investors -- thought to be activist investment and hedge funds -- have been buying up shares in the iconic Swedish company.
It is thought they plan to accuse Volvo management of being too conservative and urge it to reward shareholders by using its cash pile to finance a share buyback or a special dividend.
Mr. Johansson's assertion that the company is instead planning to use funds for acquisitions pre-empts this criticism and is designed to reassure the company's longer term shareholders. 'We elected to keep the powder dry for when we encounter structural changes in our industry,' he said.
'We will take a look at anything within our business areas. I don't think we will add another business area but we could well look at a wider product range.'
Possible purchases include expanding its existing 13 percent interest in Nissan Diesel, the Japanese truck maker.
It already has the right to take this to 19 percent within four years, but Mr. Johansson did not rule out moving above 19 percent.
'I have always argued that control is important to get a really good effect, but in Japan it is a question of learning and finding out,' he said.
The company is also in discussions with Dongfeng, the Chinese truck maker, about a possible alliance. 'We are discussing doing something bigger in China,' Mr. Johansson said.
He will also consider acquiring a truck maker in Russia if the right deal can be reached. 'I would not rule out acquisitions in Russia if we could make them in a good way,' he said.
Another area of interest is likely to be construction equipment, where Volvo is the number three player after Caterpillar Inc. of the U.S. and Komatsu of Japan. The remainder of the industry is highly fragmented.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.